Visa Ups the Ante in Mobile Transfers

Visa Inc., which has tested a patchwork of mobile payment services in recent years, has started an initiative aimed at expanding its transfer capabilities.

The San Francisco company said Thursday that it will partner with U.S. Bancorp to test a person-to-person service that can link any type of Visa credit or debit card. It also said it is collaborating with Google Inc. and Nokia Corp. to incorporate payment capabilities into the next generation of smart phones.

Visa executives said that the efforts are experimental, and that the future course of mobile payment services will depend on what it learns in these trials. They also said it is clear that the mobile phone is quickly becoming key to its strategy for making electronic payments widely available in the United States and elsewhere.

"In the U.S., we think this is going to be a major channel for increasing value … and outside the U.S. for building the infrastructure of payments that just doesn't exist," Elizabeth Buse, Visa's global head of product, told analysts at an "innovation briefing" for analysts in New York.

Visa expects to begin testing its domestic, person-to-person transfer service this year with up to 6,000 people. Participants will be able to use their mobile phones to send funds to any Visa debit, prepaid, or credit card that has been enrolled with U.S. Bancorp, or other issuers that have agreed to participate but Visa has not named.

The transactions will be initiated using the browsers built into phones, and the transferred funds will be credited directly to the recipient's Visa account. The recipient will then be able to use the funds by making a cash withdrawal at an automated teller machine or by making a purchase at any merchant that accepts Visa cards.

The service goes beyond the transfer services that are generally available. Many companies let people move funds between accounts at different financial companies, and a few, such as Bank of America Corp., let people send money to other people's accounts at the same company.

Visa's service also offers a different way to use credit card accounts, because it enables people to make deposits into them, potentially turning a credit account into a prepaid account.

"This creates an open platform for any bank and any consumer to get to any other bank and any other consumer, which creates a huge growth opportunity," said Tim Attinger, Visa's head of product innovation and development.

Executives acknowledged that the new types of payment services Visa is developing may or may not take off.

"Part of what we haven't figured out yet is what all the uses are" for the transfer capabilities, Ms. Buse said in an interview.

Bill Sheedy, the president of Visa North America, said in an interview that his company is "going to place multiple bets and ultimately look for signs from the marketplace to see what gets traction" with users. "One singular bet doesn't make sense."

A second phase of the test, scheduled to start in the first half of next year, will support cross-border transactions. Visa already offers similar transfer services in 13 countries in Europe, the Middle East, and Asia.

Eric Grover, the principal and founder of Intrepid Ventures, a Menlo Park, Calif., payment consulting firm, said few transfer services "have gained significant traction," though the Visa effort could catch on. "I don't think it's too big to think that this is a game-changer."

Visa is not the only company pushing person-to-person mobile transfers. Obopay Inc. has been touting the concept since 2006. It initially used prepaid accounts, and it is currently working with Citigroup Inc. to link the service to the banking company's consumer accounts.

Simon Pugh, the group head of mobile at MasterCard Inc., said it plans to begin the commercial introduction of its Mobile MasterCard MoneySend Person-to-Person service, which is also based on Obopay's service, next year.

Nick Holland, a senior analyst at the Boston research and advisory firm Aite Group LLC, said he expects quick uptake of mobile payments, both in the United States and around the world. "Mobile remittance and mobile P-to-P are likely to explode pretty soon. It's pretty compelling."

Visa also said Thursday that it would develop a mobile application that consumers could download to handsets using Google's Android mobile operating system, with features including alerts, merchant offers, and maps to merchant or bank locations. The application will be offered initially to Visa account holders at JPMorgan Chase & Co.

Tim Armstrong, Google's president of advertising and commerce in North America, said he expects Visa to become a leader in mobile technology. "We're good at doing platforms. Visa is very good at financial services," he told analysts at the Visa conference.

The first Android phone was introduced Tuesday by the wireless carrier T-Mobile USA, with a handset made by the Taiwanese company HTC Corp.

Visa also said it is working with Nokia, the world's largest mobile phone maker, to incorporate payment and related services — including contactless payments, remote payments, money transfer, alerts, and notifications — into the Finnish company's next generation of handsets. The first such device, the Nokia 6212 Classic, is schedule for release next month.

Nokia already offers handsets equipped with near-field communications chips, which can be used for contactless transactions. Visa has used Nokia handsets since its first contactless payments trial, with JPMorgan Chase at Philips Arena in Atlanta, began in January 2006.

Gerhard Romen, Nokia's director of strategic partnerships, said that payments capabilities using near field communications capabilities could become common on handsets in the near future.

The NFC technology could also support other features, such as enabling people to tap their phones on a movie poster, which would transmit a trailer for the film to the handset, or tapping two phones together to share photos, said Mr. Romen, who is also vice chairman of the NFC Forum, a standard-setting body.

That is the appeal of alliances such as those with Visa, he said. "Financial services add value to the mobile devices."

James Van Dyke, the founder and president of Javelin Strategy and Research of Pleasanton, Calif., said its consumer research shows that one person in 10 has expressed an interest in being able to use a mobile device to make transactions.

"That's a pretty healthy number for a new technology," Mr. Van Dyke said. The market includes distinct audiences beyond early adopters, he said, such as immigrants sending money back home.

Though he expects the adoption of mobile banking and payments to accelerate next year, he warned that it will take time for the technology to build critical mass.

"You're never going to get overnight adoption of this," Mr. Van Dyke said. "You have to mobilize — no pun intended — both the sender and the receiver."